Net radio wins reprieve

Marybeth thwarts the pigopolists

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The Recording Industry Association of America (RIAA) - the pigopoly dominated by the five biggest record labels - has suffered a setback in its attempt to extinguish Net music broadcasts. A royalty proposal that strongly favored the RIAA, produced by the arbitration panel CARP, has been rejected by the Library of Congress on the advice of the Register of Copyrights, Marybeth Peters.

The RIAA demanded a retroactive "publishing" fee of a fraction of a cent per song per listener from webcasters, and also demanded - and this bit is often overlooked - detailed listener statistics that would have made user registration compulsory.

The proposed fee is .04c, 0.5c or 0.6c, depending on the type of channel, or 15 per cent of gross revenues from the station for B2C webcasts. The webcasters had proposed 3 per cent of gross revenues.

Analog radio broadcasters need pay no publishing fee. This is a "historical accident ", the RIAA explains in its FAQ .

"The broadcasters were simply too strong on Capitol Hill," notes the RIAA. That was in the days before you could buy your own Senator.

Webcasters already pay performance rights to ASCAP, BMI and SESAC even before any RIAA copyright tax is invoked, which as Jamie Zawinski points out in his fine summary of the battle, "only makes sense if you accept that webcasting is a kind of publishing (like pressing a CD) rather than a kind of broadcasting (like a radio station.)"

Critics slammed the long drawn out CARP discussions for excluding the smaller garage webcasters. The rationale behind final arbitration proposal, published on February 20, heavily favored the labels. The proposal acknowledges that antitrust exemptions had been made for the RIAA, but incredibly, found "no record evidence [sic] supports the proposition" that the labels exhibit oligopolistic behavior.

To give you a flavor of the CARP document, the webcasters produced a wealth of material to support the proposition that the labels enjoy a net promotion benefit from having the records aired. Common sense, you'd suppose.

But no. "Webcasters also failed to present any compelling evidence," the CARP panel haughtily concluded. " In addition to a plethora of similarly unsupported opinion … they produced some unpersuasive empirical evidence to support their claim that webcasting actually causes a net promotion of phonorecord sales."

The RIAA argument is as much about controlling the promotional channels as it is about money. Underground and college radio remains beyond the reach of pluggers and payola.

Jamie Zawinski noted that the royalties favor the few star performers the labels do control, in his blog. Referring to the performance royalty distribution, he notes:-

"…regardless of what music you were playing, they take your money, keep most of it for themselves, and then divide the rest statistically based on the Billboard charts. That means that no matter what kind of obscure, underground music you played, 3/4ths of the extortion money you paid goes to whichever company owns N'Sync; and the rest goes to Michael Jackson (since he owns The Beatles' catalog); and all other artists (including the ones whose music you actually played) get nothing."

One of the few joys of the Napster trial was the education of Judge Patel. After the first hearing, and visibly furious with the file sharing start-up, she ordered the company to rewrite its software overnight. By this January, she was doubting whether the labels even had right to extend their pigopoly into the future. ®